And in the category of econ drama, there’s this, after a mention of Romer’s argument that every dollar spent by the government created about $1.50 worth of demand:
Some economists say that’s too high. Valerie Ramey of the University of California at San Diego, initially thinking as a Keynesian, developed doubts after sifting through historical examples. During the military build-ups of World War II, the Korean War and the Reagan era, a dollar spent added roughly a dollar of growth, she says. Although Ms. Ramey supported stimulus in 2009 because the economy was so weak, she doesn’t advocate more now. “We just don’t have enough evidence to prove that it’s good.”
Cool. She changed her mind. But she’s still not arguing that stimulus didn’t work—she just doesn’t want to do more now.
“We just don’t have enough evidence,” Ramey said. Journal readers might be thinking the same thing.
The debate on whether stimulus is a good anti-recession fighter is the wrong debate. What matters is whether stimulus spending does more than just put a failed economic model (one that is consumer based, and that is further based on inflated assets -- houses, equities and commodities) on life-support. A more intelligent approach to stimulus spending would have it directed towards investing in real economic and social development. Of course, the main problem with this more meaningful approach is that it would be beneficial to the common wealth - a non-starter given the existing power structure that is pathologically deferential to protecting private wealth.
#1 Posted by B J MacLachlan, CJR on Wed 28 Jul 2010 at 03:51 AM
And of course the Wall Street Journal leaves out the people who say the stimulus didn't work (at keeping unemployment at below 10%) because the stimulus was too small.
As to why it was too small, some people in the Whitehouse forgot to factor in the effect of State fiscal collapse
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/18/AR2010061803289.html
(or they just didn't care because of the politics of asking for a trillion when a few billion less would do, an attitude which doesn't extend to Wall Street who are shoveling bad assets onto and taking below bond interest loans from the three f's: the fed, freddy, and fannie)
But anyways, not all economists made this mistake:
http://www.nytimes.com/2008/12/29/opinion/29krugman.html
#2 Posted by Thimbles, CJR on Wed 28 Jul 2010 at 04:42 AM
And you can't talk about the stimulus debate with out bringing in the debates at the time like from David Obey:
http://www.thefiscaltimes.com/Issues/Budget-Impact/2010/07/16/David-Obey-I-Leave-More-Discontented-Than-I-Started.aspx
"The problem for Obama, he wasn’t as lucky as Roosevelt, because when Obama took over we were still in the middle of a free fall. So his Treasury people came in and his other economic people came in and said "Hey, we need a package of $1.4 trillion." We started sending suggestions down to OMB waiting for a call back. After two and a half weeks, we started getting feedback. We put together a package that by then the target had been trimmed to $1.2 trillion. And then [White House Chief of Staff] Rahm Emanuel said to me, "Geez, do you really think we can afford to come in with a package that big, isn’t it going to scare people?" I said, "Rahm, you will need that shock value so that people understand just how serious this problem is." They wanted to hold it to less than $1 trillion. Then [Pennsylvania Senator Arlen] Specter and the two crown princesses from Maine [Sens. Olympia Snowe and Susan Collins] took it down to less than $800 billion. Spread over two and a half years, that’s a hell of a lot of money, but spread over two and a half years in an economy this large, it doesn’t have a lot of fiscal power.
We’re in danger of [throttling back on government spending too soon, as Franklin Roosevelt did during the Depression]."
And of course, what certain others were saying at the time:
http://www.nytimes.com/2009/01/09/opinion/09krugman.htm
What the stimulus shows is that a weak government response is not always better than no government response because if you fail to fix the problem, you discredit the solution. If a doctor gives you medicine for an infection, you take the prescription and wait for recovery. You don't take half the prescription off an on and hope for the f'in best. When you don't get better, the fault lies not with the medicine, but the one taking it. Keynes shouldn't be discredited, Obama's economic and political team should be.
Obama should be. The republicans definitely should be.
What the hell does it take to get these cockroaches out of the oval pantry?
#3 Posted by Thimbles, CJR on Wed 28 Jul 2010 at 05:02 AM
You're running a business that has been poorly managed for 70 years and consequently deeply in debt to its strongest competitors...
So what do you do?
A. Cut spending, increase revenue and pay down debt, or
B. Increase spending, suppress economic development and incur more debt while simultaneously running up huge trade deficits with your competitors...
Hmmmm..
Tough call here.
It ain't rocket science, people.
#4 Posted by padikiller, CJR on Wed 28 Jul 2010 at 06:53 AM
"A. Cut spending, increase revenue and pay down debt"
And what happens in an economy when everybody does that, because everybody borrowed during the bubble?
http://www.youtube.com/watch?v=HaNxAzLKegU
You lose a decade, at best.
Now it sucks because the government should have been paying down debt while times were, economically speaking, good during the Bush Administration, but that doesn't change the current situation.
The major financial institutions are stuck with bad assets, big liabilities, and a revenue stream they need to pump up some how in an investment adverse environment. This means they will focus more on fees and less on ROI. They are not boosting the economy, they are a negative pressure on economic recovery.
It's not socialism or evidence of some other failed economic philosophy to demand a more active government response in this situation. It's necessary, and the people in charge need a kick in the ass to do what's necessary. They are still quibbling over what to do with Elizabeth Warren's weakened Financial Protection Agency. The Obama people are captured by Wall Street and the conservative animal spirits.
We all need to be freed of that. They have failed us in the most extreme ways imaginable over the last 10 to 20 years...Can we not try something better?
#5 Posted by Thimbles, CJR on Wed 28 Jul 2010 at 07:40 AM
You're off your political rocker, Thimbles, and you need to expand your repetoire beyond your hackneyed "Bush did it" tune ...
The debt increased every one of the eight years Clinton was in office, too. And every one of the four years Carter was in office. And every one of the eight years Kennedy and Johnson were in office.
The "Clinton surplus" BS is nothing but a liberal crack dream made real through historical revisionism and journalistic malpractice.
You can't honestly believe that the solution to our national economic malaise is to borrow MORE money from China so that we can put MORE Chinese crap on the national Walmart charge account, can you?
#6 Posted by padikiller, CJR on Wed 28 Jul 2010 at 08:18 AM
"The debt increased every one of the eight years Clinton was in office, too. And every one of the four years Carter was in office. And every one of the eight years Kennedy and Johnson were in office."
Padikiller, that would be accurate but false, as they say. The only thing that matters is debt as a percentage of GDP, and it fell under Carter, Johnson, Kennedy, and Clinton. It skyrocketed under Bush II and Reagan.
#7 Posted by Ryan Chittum, CJR on Wed 28 Jul 2010 at 01:20 PM
You could also add this link in there:
http://www.usgovernmentrevenue.com/downchart_gr.php?year=1975_2010&view=1&expand=&units=b&fy=fy11&chart=G0-fed&bar=1&stack=1&size=m&title=&state=US&color=c&local=s
Which was the result of this:
http://www.usgovernmentrevenue.com/downchart_gr.php?year=1975_2010&view=1&expand=&units=p&fy=fy11&chart=F0-fed&bar=1&stack=1&size=m&title=Total%20Revenue%20as%20a%20Percent%20of%20GDP&state=US&color=c&local=s
When government cuts it's revenue stream, deficits grow. When governments increase their revenue stream, deficits shrink. During Clinton you had increased revenue and decreased spending as a percentage of GDP. Under Bush II you had the opposite.
Now that we've got an ongoing collapse we can't switch back until we've switched the momentum. 2BContinued
#8 Posted by Thimbles, CJR on Thu 29 Jul 2010 at 02:41 AM
And according to recent notes from Atrios and Krugman:
http://www.eschatonblog.com/2010/07/not-just-math-plan.html
http://krugman.blogs.nytimes.com/2010/07/28/how-did-we-know-the-stimulus-was-too-small/
Obama's efforts have been too weak to do that.
#9 Posted by Thimbles, CJR on Thu 29 Jul 2010 at 02:44 AM
Ryan Chittum wrote: "The only thing that matters is debt as a percentage of GDP, and it fell under Carter, Johnson, Kennedy, and Clinton. It skyrocketed under Bush II and Reagan"
padikiller responds: Well, then... It's all settled!...
Nothing to see here in CJR-LAND. Move on, people.
But seriously, Mr. Chittum...
Don't you think that as a "watchdog" of "professional journalism" it might be just teeny, tiny tad bit better to let the readers decide what "matters"? You think?
It sure is coincidental that "the only thing that matters" in your book is a particular statistical metric that jibes with the liberal agenda.
Instead of deciding what matters to your readers, why don't you just do your job? Namely leave your politics at the door and realize that issues that aren't personally important to you might be extremely important to others when you cover an issue?
Indeed, the plain fact of the matter is that every dollar in debt incurred during the Carter (or Nixon) administration means PRECISELY the same thing (in terms of repayment) to the American taxpayer as a dollar in debt incurred today.
#10 Posted by padikiller, CJR on Thu 29 Jul 2010 at 08:40 PM
Paddy, shutup. I posted graphs showing that the federal deficit went negative during the Clinton years. It may be true that the debt went up, but that wasn't because of Clinton's spending, which went down as you recommended, and Clinton's revenues, which went up as you recommended. If you weren't a mindless partisan you'd love the Clinton record, but conservatives don't love good fiscal policy (they threw out the first George Bush after he raised taxes), they love government spending, they love government debt when it's spent on the right things and people.
http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/
The conservative movement is run and flush with mindless partisans. They have proven themselves grossly irresponsible over and over again over the last 30 years. The further they are kept from power, the better it is for the nation. The closer they are to getting power and having their irresponsibility rewarded, the better it is for China.
#11 Posted by Thimbles, CJR on Thu 29 Jul 2010 at 09:27 PM
Give it a rest Thimbles...
I'd take Clinton any day over Bush..
Welfare Reform.
Crime Bill.
Reinventing America.
Clinton was a WHOLE lot more conservative than Bush was.
About the ONLY fiscal complaint I have against Clinton is that he went TOO far down the Republican Road by signing onto NAFTA.
However, your creative bookeeping is nothing but a dodge.
The national debt rose every single year of the Clinton administration.
PERIOD.
#12 Posted by padikiller, CJR on Thu 29 Jul 2010 at 10:50 PM
You're the one who brought up Clinton and claimed the surplus was a myth.
It wasn't. Deficit does not equal debt. From 1993 to 1996 Clinton cut the federal deficit by 2/3rds. He did this by cutting federal spending as a % of GDP and by raising revenues by 21%. By 1998 he had eliminated the deficit. In 1999 the federal government collected 125.6 billion more than it had spent. Now that couldn't pay down the debt, but it did slow the growth of debt and it a fact that federal revenues exceeded federal spending during 1998 and 1999.
http://www.factcheck.org/askfactcheck/during_the_clinton_administration_was_the_federal.html
The distraction is finished, you're done. Now we can go back to the stimulus topic.
#13 Posted by Thimbles, CJR on Fri 30 Jul 2010 at 12:06 AM
Thimbles wrote: Deficit does not equal debt
padikiller responds: Nice try. I never said it did.
I'm not talking about the deficit. You are (as a dodge).
I'm talking about the national debt.
And the simple, undeniable, irrefutable truth of the matter is that the national debt increased in every single year that Clinton was in office.
PERIOD.
All your semantical word games won't change this little reality. Here it is in black and white, straight from the Treasury Department. Read it and weep:
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm
Anyhow...
You aren't going to see me argue against the point that Clinton manageed money better than Bush did. Despite what you guys think, I'm no Republican and I am certainly no George Bush groupie.
Clinton sold out and caved to the Republican agenda - signing off on all the things he promised to veto and throwing all of his big-ticket liberal/progressive campaign promises (health care reform, expansion of welfare) under the bus.
Some of these Republican agenda items were good (welfare reform, crime bill) and some were bad (NAFTA). But there is no question that Clinton was more fiscally conservative than W was.
#14 Posted by padikiller, CJR on Fri 30 Jul 2010 at 06:56 AM